Credit card firms phase out signatures

STACY COWLEY

For nearly a decade, Doug Taylor, a sales manager who travels often for work, has signed credit card receipts with a doodle of a dog wagging its tail.

No cashier has ever rejected his “signature” as invalid.

“It gets a laugh, most of the time,” said Taylor, 44, who lives in Mobile, Ala. “Or they just glance at it and don’t really notice.”

Credit card networks are finally ready to concede what has been obvious to shoppers and merchants for years: Signatures are not a useful way to prove someone’s identity. Later this month, four of the largest networks — American Express, Discover, Mastercard and Visa — will stop requiring them to complete card transactions.

The signature, a centuriesold way of verifying identity, is rapidly going extinct. Personal checks are anachronisms. Pen-and-ink letters are scarce. When credit card signatures disappear, handwritten authentications will be relegated to a few special circumstances: sealing a giant transaction like a house purchase, or getting a celebrity to autograph a piece of memorabilia — and even that is being supplanted by the cellphone selfie.

Card signatures won’t vanish overnight. The change is optional, leaving retailers to decide whether they want to stop collecting signatures.

Target plans to eliminate them this month. Walmart considers signatures “worthless” and has already stopped recording them on most transactions, according to Randy Hargrove, a company spokesman. It will soon get rid of them completely.

Mastercard said it has been wanting to make the change for years, but held off until cards embedded with computer chips became common.

Card companies, which cover the costs of fraudulent credit card spending, started adding the microchips more than a decade ago to reduce fraud-related losses. The chips create unique codes for each transaction, making the cards much harder to copy. The chips have long been popular in Europe and Asia but only took off in the United States three years ago, when the card networks began punishing merchants that still relied on the old card-swipe technology. At that point, signatures became largely irrelevant in resolving fraud claims.

“The signature has really outrun its useful life,” said Linda Kirkpatrick, Mastercard’s head of business development in the United States.

It took nearly a century for technology to overtake the hand-scrawled name. The charge card dates back to the 1920s, when stores started issuing embossed metal plates with paper signature strips that allowed customers to add purchases to their ledger and settle the bill later.

Thirty years later, banks and merchant networks introduced cards that worked at a variety of retailers. By the late 1950s, a shopper could leave home without any cash and buy groceries, gas and dinner, secured only by a signature.

Investigators scrutinized signed credit slips to determine whether cardholders were present when transactions were made. Signatures were required on all purchases; merchants who failed to collect them generally had to absorb the losses if transactions were disputed.

Then online shopping took off, forcing card issuers to come up with new ways to detect and adjudicate fraud. As their forensic systems improved, signatures became a relic.